Minnesota Transportation Act a Horrible Idea

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Minnesota Transportation Act a Horrible Idea

Somebody must point out why the Minnesota Transportation Act, though a clever political statement, is far from ideal in its implications. The bill was introduced into the Minnesota state legislature by a Minnesota citizen and seeks to make use of the "accepted ability of banks to create money."

First of all we should remember that the bill is blatantly in violation of the plain language of the U.S. Constitution, but lets lay that aside for the moment and assume that it could be enacted. If enacted the bill would command Minnesota state chartered banks to create an unlimited amount of free U.S. currency upon demand for the use of the state (but only, interestingly enough, to pay for transportation projects). It represents no attempt to create a regulated currency system.

Whatever the benefits of the scheme may be, consider the legal implications: If Minnesota can legally grant herself the right to print money for all her transportation projects, then what would bar Mississippi, Massachusetts, Maine, Montana, and Missouri from granting themselves rights to print money not only for transportation projects but for their every need? Clearly not the basis for a sound and stable national currency system.

As much as I believe in federalism, I wouldn't want Minn. printing money whenever it feels the urge to re-number all the exit ramps on the I-35.

The bill is a clever political statement: it shrewdly parodies the federal government for abusing its power to regulate the currency by creating money to pay for its own expenses. But if we make the mistake of taking the bill seriously, then it becomes nothing more than a tool of economic warfare: each state would hurry to pass similar bills allowing them, too, to print money enough to fulfill their every desire.

We already have the federal government destroying our currency and printing money out of thin air. Do we really need Minnesota's help?

Here is a recent house version: http://wdoc.house.leg.state.mn.us/leg/LS86/HF0888.0.pdf

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Re: Minnesota Transportation Act a Horrible Idea

The way I understood the idea behind this, from digging into Byron Dale's website, was that in building infrastructure projects and monetizing them, the money that was created from these projects was "wealth" based money, in contrast to our current debt based system.

I also believe that this system was planned to co-exist with our current fractional-reserve system and sort of counterbalance the "larger fool" mathematical improbability assiciated with our debt based currency creation where the debt can never really be paid off as the usury is never created within the system.

I do believe that if implemented, it should be at the federal level, as the MTA is borderline unconstitutional and if passed at the State level, would probably be struck down by the courts.

I could also see how this bill would be inflationary for materials and energy associated with those types of projects. 

I'm glad to see more discussion of this topic, as I do not think its a horrible idea.  It may have some flaws, but at least its a proposed solution.

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Re: Minnesota Transportation Act a Horrible Idea

It's about time a thread was dedicated to pull this bill apart and expose its pieces, be they good, bad or ugly.  I'm also glad this is coming from you, jrf29 as I believe you have one of the best legal and economic minds around here.  Off to read the bill (finally).

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Re: Minnesota Transportation Act a Horrible Idea

Your subject line doesn't invite discussion...discussion over in your mind.

I find it funny that if a state suggests something quite small in order to fight the completely unconstitutional DC government and fraudulent Federal Reserve, then we get all upset that "it's unconstitutional!"  

Quite the contrary.  For much of US history local communities had forms of barter, people discovered gold (created their own currency), and states had their state chartered banks which printed their own notes.  Article 1 just gives Congress a power to coin money and regulate its value, i.e. currency.  That's M0.  It doesn't say that no other institution (bank or state or local) can develop ways of engaging in commerce.  Only after the rise of the imperial executive branch and the oligarchy behind the Fed have we been brainwashed to think all things come from DC/Wall St.  Only after 20th century financial legislation and the rise of elitist jurisprudence that doesn't believe in federalism would courts agree with you that nobody other than a few rich bankers behind the Fed can print notes and supposedly autonomous, powerful states can't. 

I guess Bank of America = Congress in your definition because they sure create a lot of money.  A state would only be allowed to print money over your dead body, but BofA, Citi, JPM are allowed to no problem.  Yeah...I'm pretty sure that's consistent with the Constitution.  

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Re: Minnesota Transportation Act a Horrible Idea
crazyhorse wrote:

The way I understood the idea behind this, from digging into Byron Dale's website, was that in building infrastructure projects and monetizing them, the money that was created from these projects was "wealth" based money, in contrast to our current debt based system.

Hi crazyhorse.  I submit that merely because funny-money is spent on something massive and physical doesn't mean that the monetary system is sound.  If it did, then why doesn't even the poorest nation pave every road, and build bridges and canals using money freshly printed in its national basement?  And why must we stop at just transportation projects?  Why can't factories, mines, and massive agricultural assets of all sorts be purchased in unlimited quantities with freshly-printed money?  

Funny money is funny money, no matter what you spend it on.  Devastating inflation would be the inevitable result of this bill (assuming, for the sake of argument, that it was in any real danger of being enacted).

Spending money directly into the economy as an alternative to loaning it into existence.  This has been proposed as a very workable means of managing the economy.  See the last part of Paul Grignon's "Money as Debt" video.  He asks a legitimate question: why should the government have to pay interest to private parties on its own public debt?  Under a "direct money creation" system, dollars would not be loaned into existence, but rather <i>spent</i> into existence by the federal government.  Under such a system, the government need not collect taxes.  Public spending could be openly discussed in terms of the percent inflation that would result for that year.  Its a very intriguing idea, and I'm not opposed to that idea - but I'm not an economics expert either.

But the Minnesota Transportation Act is radically deficient in three critical respects:  

(1) It is not a federal plan, hence the constitutional problem.  As much as we may disapprove of the fed's handling of the currency, one must admit (as the constitution does) that money is truly an interstate thing, and we cannot have 50 separate governments competing with each other to see who can print the most money.  

(2) The bill contains no mechanism whatsoever regulate or limit the amount of money printed.  Theoretically, Minnesota could print and spend an unlimited amount of money as long as this money was spent on "transportation projects."  The union wants seven-figure salaries for all truck drivers involved in highway work.  Well why not?  After all, it will "stimulate" the Minnesota economy.

(3)  If we assume that Minnesota can grant herself the right to pass this bill, then what stops every other state from printing their own money for whatever purpose they please?

Therefore I agree that the MTA is a stimulating basis for discussion, argument, and intellectual banter.  It a represents the seed of a potentially good idea, and I do like the idea.  

But my criticism is directed at this particular bill.  If we want to talk about <i>actually passing the MTA</i> as it is written today, as some people have advocated doing, then for the three reasons above I argue that it could not fail to result in uncontrolled printing and the destruction of the currency.

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Re: Minnesota Transportation Act a Horrible Idea

Well that was quick.  Jrf29, I don't believe your brain is needed here as there must be more important things to worry about.  This thing is obviously just a political ploy to either make a statement, or force a constitutional crisis, or both.  

I must applaud the brevity of the bill.  At least they didn't make the mistake of proposing something 1,000 pages long.  As for being a way to make a  political statement, I guess it is clever, but they should have come up with a more intriguing name.  

The idea of printing up whatever we need for infrastructure is of course ridiculous.  Infrastructure is not an asset in the conventional sense.  You do not foreclose on a highway or a train system.  Infrastructure is really a liability in that it has very high maintenance costs, and present a huge risk if the project does not result in an increase in productive capacity.  

If the infrastructure project does not generate an increase in productive capacity enough to offset financing and maintenance costs, which are paid for via tolls, user fees, or taxes, then the end result is a net drain on the economy.  At least financing costs keep our ever-ambitious politicians in check for creating too many ill-conceived projects, but even with that check, the list of ill-conceived infrastructure projects has a long and wide-spread history.  The train system in Italy, of which I was a recent victim, is a great example.  

This is not to say there are no good infrastructure projects, including many that have increased the productive capacity of the beneficiaries.  In fact, most infrastructure projects probably are of the "good" variety.  However, I do not want the government to have a blank check to do what it pleases with the limited labor and resources available in their jurisdictions, which it would consume in its drunken orgy of saving the rest of us from ourselves by building the next train, canal, or energy project.  

 

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Re: Minnesota Transportation Act a Horrible Idea
strabes wrote:

Your subject line doesn't invite discussion...discussion over in your mind.

  Well, I thought better of that right after I posted the topic, but it was too late.  My apologies.

While I'm not ashamed to admit that I do have affection for the U.S. Constitution as it is written, and I do not believe that one violation of the constitution should justify another, for the purposes of this discussion I am not wedded to the federal constitution as it's written.  I do suggest that regardless of what the constitution says, the control of any fiat current must be centrally controlled if it is to have any hope of working.

Again, I am not taking the side of the federal reserve.  I'm not saying that I approve of how the currency is managed.  The MTA sends a powerful political message and it is a poignant reminder that the federal government has been acting improperly.  But that said, if we want a stable currency system, then this act is one more step in the wrong direction.  Its one more giant step toward the unlimited and uncontrolled printing of paper money. 

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Re: Minnesota Transportation Act a Horrible Idea

I believe the purpose of this bill is to cause people to realize the very things Strabes is pointing out.   The bill, as ridiculous as it is, is no more ridiculous than our centralized, federalized system.  I really am not familiar enough with Minn politics or the authors of the bill to know whether this is just a modern version of "A Modest Proposal", or if they're serious.  

If they're making a political statement, I applaud them.  If they're serious, then this is exactly the kind of thing I fear for when our system does collapse, the Fed abolished, what have you.  I fear we'll replace it with something even worse or more dangerous.

 

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Re: Minnesota Transportation Act a Horrible Idea
jtf wrote:

(1) It is not a federal plan, hence the constitutional problem.  As much as we may disapprove of the fed's handling of the currency, one must admit (as the constitution does) that money is truly an interstate thing, and we cannot have 50 separate governments competing with each other to see who can print the most money.

Only true given the course of 20th century jurisprudence where ATF/IRS/FBI/Secret Service/Customs and then the courts became enforcers for the Fed.  What you're saying isn't true based on the original interpretation of the Constitution, the commerce clause, the money clause.  Article 1 talks about currency...minting US coins at the West Point Mint.  Banks/states/towns/people found gold, printed notes (same as M1/M2/M3 today) etc.

On your points 2 and 3, boom/bust cycle is what regulates it, just like it does today.  Only today's boom/bust is going to kill millions of people around the world because it became so much of a grander scale than it always was when it was local/state levels (contrary to the idea that the dollar is the US system regulated by Congress, it is the global system regulated by international bankers).  

jtf wrote:

Therefore I agree that the MTA is a stimulating basis for discussion, argument, and intellectual banter.  It a represents the seed of a potentially good idea, and I do like the idea.

Guess I overreacted to your subject line.

 

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Re: Minnesota Transportation Act a Horrible Idea

jrf29,

Thanks for bringing up this important bill, I hope others will take a closer look at what could happen in Minnesota and it's national implications.  I agree with some of the things that you said, but I look at it from a different perspective that I'd like to share.  

jrf29 said:

First of all we should remember that the bill is blatantly in violation of the plain language of the U.S. Constitution.  

I'm not a constitutional attorney but I would suggest that our current system is a violation of the constitution.  As to legality of the MTA, Ellen Brown (an attorney) suggests it is constitutional and presents a legal argument in her article entitled "ANOTHER WAY AROUND THE CREDIT CRISIS: MINNESOTA BILL WOULD AUTHORIZE:STATE BANKS TO "MONETIZE" PRODUCTIVITY."  (scroll 2/3 down on the page).

jrf29 said:

If enacted the bill would command Minnesota state chartered banks to create an unlimited amount of free U.S. currency upon demand for the use of the state (but only, interestingly enough, to pay for transportation projects). It represents no attempt to create a regulated currency system.

First, as you said, it would allow state chartered banks to create money.  As it stands now, the private non-Federal Reserve system creates all of our money,  the banks have a legal monopoly.  This could be justified if the banks were lending their money or at least backing it up.  But they aren't; every dollar created is backed solely by the people and property of the United States.

For example, this 1957 "Silver Certificate" clearly states that the dollar may be redeemed by the U.S. Treasury:

This tells us that while the banks in 1957 were creating "free" money through profitable fractional lending; all money was backed by the silver held by the United States.  They were lending money that we alone backed with collateral, every dollar they lent at virtually no cost, cost us a dollar in silver.  What a huge conflict of interest - every dollar that they create for profit, costs us a dollar in collateral.   

For the gold backed system to work, "We the People" would be required to constantly buy more gold and silver to back up the profitable loans made by banks.  Of course that system never worked and eventually it was abandoned but the fact remains that we are backing up every dollar the banks create by our property and people.

Only sovereign nations have the power to issue currency, the non-constitutional "loop-hole" is that we may outsource this power to a private banking cartel.  People in the U.S. have been shielded from the benefits of a nation issuing it's own currency direct.  As Thomas Edison said, "if a nation may directly issue a dollar bond, it may issue a dollar bill the same way."  The difference is that the dollar bond pays interest to private banks while the dollar bill is issued free from any debt.

The MTA restores the right of the people to issue their own money free from banker debt.  While the MTA goes further, we know that North Dakota has had a state bank since the early 1900's.  Not coincidentally, they are unique in running a budget surplus while other states are close to bankruptcy.

jrf29 said:

Whatever the benefits of the scheme may be, consider the legal implications: If Minnesota can legally grant herself the right to print money for all her transportation projects, then what would bar Mississippi, Massachusetts, Maine, Montana, and Missouri from granting themselves rights to print money not only for transportation projects but for their every need?

I agree with your logic, if one state creates money free from private banker debt, it would be a boon to their economy and other states would surely follow.  What's wrong with that?

Issuing currency is our most important prerogative other than declaring war.  As Lincoln said:

"The government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. 

The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government's greatest creative opportunity.   The financing of all public enterprise, and the conduct of the treasury will become matters of practical administration.  Money will cease to be master and will then become servant of humanity."

I hope your post draws a lot of interest because it asks the question; who should issue, control and benefit from a national currency...the people or the private non-Federal and no Reserve banks?

jrf29 said:

The bill is a clever political statement: it shrewdly parodies the federal government for abusing its power to regulate the currency by creating money to pay for its own expenses.

Yes, government should pay for itself.  Did you know that the U.S. government paid all of it's expenses, without any income or sales tax, up until the early 20th century?  Do you think it was a coincidence that both the non-Federal Reserve Act and Income tax came about within months of one another, in 1913?  The income tax is the means for the private banking cartel to directly collect interest on the national debt in defiance of constitutional law.  

jrf29 said:

We already have the federal government destroying our currency and printing money out of thin air. 

No sir, this statement is wrong.  The federal government has not created any money since 1963.  All of our money is created by private banks, the government simply provides the collateral and relinquishes the power.

Byron Dale, the genius behind the MTA has a much more important message.  He takes something terribly complex (monetary theory) and explains the key in the most simple terms.  That is that, the most important attribute of a monetary system is to have money issued as national wealth, and not as banker debt.

Larry

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Re: Minnesota Transportation Act a Horrible Idea

From what I have read of this bill I don't think it is a wise idea. I truly believe we would not be in this mess if it wasn't for the current system, which flies in the face of the Constitution.

 

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Re: Minnesota Transportation Act a Horrible Idea

Davos, 

You read the entire "Health Care" Bill.  You'll be done with this bill before you know you started.  It's like 3 pages.

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Re: Minnesota Transportation Act a Horrible Idea

Hi Strabes, Hi Larry,

On the question of the advisability of the MTA, I can only add the following:

The problem with the MTA, it seems to me, is that there is absolutely no means to limit the amount of money printed by Minnesota (problem #2, above), and it also sets a precedent which will allow other states to print as much money as they wish (problem #3, above).  

I propose that it is not possible to create economic prosperity merely by printing money, even if that money is spent on bridges and asphalt.  Each dollar printed will eventually be paid to an individual person, who will then want to spend it on haircuts and restaurants and sunglasses, and every other kind of thing produced in the economy.  But the total production of the economy does not increase when Minnesota prints more cash.  This particular system of paper money has no mechanism whatsoever for regulating the amount in circulation: it merely calls on state banks to give Minnesota as much money as it wants, so long as it spends that money on transportation projects.  There is no limit to the amount of money that can be created. 

If the mere act of printing money made a state wealthier, then if Minnesota were willing to print enough money, it could build a vast subway system with a station beneath every house.  Why not pave the state with solid gold?  Of course that's silly - we know that the supply of gold is limited.  But so are other resources limited.  As Minnesota began printing unlimited money to build tunnels and bridges, first the price of raw bridge and tunnel materials would begin to rise.  Then, as that money was spent into the economy, the prices of everything would begin to rise.  Minnesota, try as they might, cannot increase the amount of real wealth merely by printing paper money.

Let me be clear: I agree that a system where paper money is spent into existence (rather than loaned), properly managed, might work.  The problem with the MTA is that it contains no means to control the amount of money created.

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Re: Minnesota Transportation Act a Horrible Idea

On the question of the constitutionality of the MTA, I'd argue that we don't need to look beyond two clauses in the federal constitution: Art. I sec. 8 clause 5 and Art. I, sec. 10, clause 1.  The first clause clause gives Congress the right to "coin money" and to "regulate the value" of its money, and the second clause clearly prohibits states from coining money, or issuing bills of credit, or making anything but gold and silver a tender (legally forcing its citizens to accept it in payment of debts).

If a state forces a bank to print an unlimited amount of Federal Reserve paper whenever they feel the inclination, that would be an infrigement on the right of the US government to regulate the value of the federal currency.  Period.  It is logical for it to be so written, because money is truly an interstate thing, and only the federal government is in a position to properly regulate it (if only they would do so today).

This is also why the US constitution requires the states (but not the federal government) to use only gold and silver as tender.  The states were only to use paper directly backed by gold or silver, and they could not force their citizens by state law to accept any other form of payment.  State bills circulated freely alongside U.S. Treasury notes until 1865, when the National Banking Act placed a 10% tax on all state bills, effectively forcing them out of circulation.

Whether or not the current federal reserve system is constitutional (a position I won't defend), the "gold and silver" clause still clearly prohibits the states from issuing "bills of credit" or coining money, a power which is given to the federal government.

Furthermore, the "bills of credit" and "gold and silver" clause, as written, applies only to the states.  It would have been just as easy for the framers to write: "No State, nor the United States, shall issue bills of credit nor make anything but gold and silver coin a tender..."  This was probably not an accident, since unbacked paper currency was customarily resorted to by nations in time of war and national necessity (unbacked paper was issued during the revolutionary war, the war of 1812, and again during the Civil War).  The framers probably never dreamed that the states and people would tolerate an unbacked currency during peacetime.

I am not specifically defending the federal government's current unbacked paper money system, merely pointing out that the constitution is very clear that the states shall not issue their own unbacked currency.

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Re: Minnesota Transportation Act a Horrible Idea

jrf29,

Thanks for your response.  I think your concern with disciplined spending is an important and valid point that needs addressed.  

Maybe Thomas Hedin can respond to your question as it relates to the MTA, he's part of the Byron Dale team pushing the bill.  I will research the MTA more later tonight when I get back.

jrf29 said:

Let me be clear: I agree that a system where paper money is spent into existence (rather than loaned), properly managed, might work.

When I read this part I was pleasantly surprised to see how reasonable and open you are.  Let me share some of my ideas as to how spending might be kept in check:

  • One of the possible guidelines that I see would be to monitor the amount of interest debt coming in the next year.  For example, let's say $2 trillion (I don't know the actual number) will be required in 2010; then an amount equal or slightly greater should be spent into the economy free of debt.  This would balance the debt with available money in solving the dilemma described in the CC (perpetual growth required).  States may have allocations.
  • All money spent into circulation must be used to buy assets & infrastructure - which backs the currency with value.  This means no money should be created to maintain operational expenses.  The government must have a budget for operations, and live within their means.  There is absolutely no reason why government should not pay for themselves.  If they are 25% short, than they are 25% too big and need downsized accordingly.
  • Purchased assets would require a feasibility study just as we do in the private sector.  For example, a mass transit system may show a positive return within 5 years.  If the project offers no payback either directly or through increased efficiency, it is a no go.
  • Projects that show an immediate payback should be given a special status that could allow the guideline in my first bullet to be increased.  For example, let's say Pennsylvania decides it wants to reduce the energy used by homes and buildings by 50%.  A program could be implemented whereby buildings and homes could verify that the improvements would pay for themselves through energy savings.  Unlike direct spending discussed above, I would make this money available as 0% loans (+ transaction fees).

    For more details on this part of the plan, please see my post entitled "ZIRP for the People and by the People to help solve our energy & environmental dilemma."

I would be very interested to hear your thoughts and if you feel so inclined, I would greatly appreciate any ideas others may have to solve the  "discipline" dilemma.  One really exciting thing about issuing our own money is that there are sooo many options, it is a huge creative opportunity.  Thanks for the great discussion.

Larry

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Re: Minnesota Transportation Act a Horrible Idea

I disagree with Ms. Brown's analysis.

On the advisability of the MTA she writes,

Quote:

"The argument against this creative approach is that it would be inflationary, but would it? Inflation results when 'demand' (money) increases faster than 'supply' (goods and services); and in this case goods and services would be increasing along with the money available to spend, keeping the money supply in balance and prices stable. In fact, it is the lending of money created out of thin air that is inflationary, because banks create the principal but not the interest necessary to pay back their loans."

This is simply not true.  If it were true, then inflation would not have been possible before the advent of debt-based money.  A simple mental exercise will convince even the most skeptical reader that the economy's potential supply of goods and services does not increase simply because Minnesota prints money.  The fact that I buy bridges and railways does not mean that the productive capacity of the economy will increase with each dollar that I print.  Many non debt-based fiat money systems have failed after attempts to use them to "print and pay." Famously, there was France's disasterous experiment with fiat in the late 18th century.  This is recounted in detail by Andrew Dickinson White (co-founder of Cornell University) in "Fiat Money Inflation in France," 1912.  As he said there, "These men were logical enough to see that it would be inconsistent to stop at the unlimited issue of silver dollars which cost really something when they could issue unlimited paper dollars which virtually cost nothing.  In thus exhibiting facts which Bishop Butler would have recognized as confirming his theory of 'The Possible Insanity of States,' we..."  

Andrew D. White's paper is worth reading because it gives a blow-by-blow chronological account of the collapse of France's fiat currency.  It is also interesting in that it shows how rapidly commerce resumed once the failed currency was abandoned.

On the constitutionality of the MTA, I also disagree with Brown's analysis.  She seems to distort the facts slightly in order to support her argument for the constitutionality of the MTA.

Bearing in mind what we already know about the constitution, Ms. Brown attempts to make it seem as though the constitution is referring only to "promissory notes" when it prohibits states from issuing "bills of credit."  She cites the 'Lectric Law Library's definition of "bills of credit."  But she obscures the full meaning by only citing part of the defintion.  The full definition is here:  "Such bills of credit are declared to mean promissory notes or bill issued exclusively on the credit of the state, and for the payment of which the faith of the state only is pledged."  In other words, "bills of credit" refers specifically to unbacked fiat.

This becomes even more clear when we look at historical references.  For many years, the colonies issued a type of currency known as "colonial scrip" which was paper fiat money.  This colonial scrip was called "bills of credit."  The way that the colonial governments forced people to accept the fiat was by making it "legal tender" (if a person tendered one of these bills as payment for a debt, a court of law was required to rule that the debt had been legally discharged).    

Thus, when the constitution says that states shall neither coin money, nor "issue bills of credit," nor "make anything but gold and silver coin a tender," it is specifically prohibiting states from issuing unbacked paper and forcing citizens to accept it.  One could of course argue that the MTA doesn't really advocate creating state currency: it merely forces the banks to print more federal currency.  But that is an infringement on the explicit right of the federal congress to "regulate the value" of money: essentially one state (in which other US citizens have no legal representation) would be counterfeiting the currency of the entire Union.

If unbacked paper was to be issued at all, the framers wanted that power to be held by the central government, and probably assumed that it would only be used in times of emergency (like the war of 1812).  Whether or not the constitution gives the federal government the right to make its paper currency "legal tender" is an interesting question, but that is a different conversation (one source says: Congress was originally understood to have no power to make anything legal tender outside of federal territories...but in 1868 a Supreme Court packed by Pres. Ulysses S. Grant, in the Legal Tender Cases, allowed Congress to make paper currency issued by the U.S. Treasury, backed by gold, legal tender on state territory, a precedent that remains controversial to this day, when courts allow paper currency not backed by anything to be considered 'legal tender.'")

I suggest reading the short Wikipedia articles on "Colonial Scrip" and "Continental Currency."    Of course Wikipedia is not an authroitative source, but it does it put the "bills of credit" clause in context, and contains interesting bits of history such as:

"In 1645 the legislature of Virginia prohibited dealing by barter, and abolished tobacco as currency," and also suggests that the basic idea behind the MTA could work - spending money into the economy, rather than loaning it:

"Colonial scrip was not backed by gold or silver and therefore the colonies could control its purchasing power...It was different from the conventional European mercantilist system of money which required governments to borrow from banks and pay interest for those loans, as gold and silver were the only regarded forms of money. Colonial scrip, were "bills of credit" created by the government, based on the credit of that government, and this meant that there was no interest to pay for the introduction of money. This went a considerable way towards defraying the expense of the Colonial governments and in maintaining prosperity.

"The currency was born when a lack of gold and silver in the Colonies made trade hard to conduct, and a barter system prevailed. One by one, the Colonies began to issue their own paper money to serve as a medium of exchange to make trade vibrant. The Governments could then retire excess notes out of circulation by taxing the people, helping some colonies generally avoid inflation. Each colony had its own currency and some were better managed than others. It was banned by English Parliament in the Currency Act after Benjamin Franklin had explained the benefits of this currency to the British Board of Trade. Outlawing the circulating medium caused a depression in the colonies, and Franklin and many others believed it to be the true cause of the American Revolution."

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Re: Minnesota Transportation Act a Horrible Idea
DrKrbyLuv wrote:

No sir, this statement is wrong.  The federal government has not created any money since 1963.

Quite right, I should have said, "federal reserve" instead of "federal government."

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cannotaffordit
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Re: Minnesota Transportation Act a Horrible Idea

strabes, Farmer Brown..........Just for the record, I agree fully with what I consider your brilliant comments here.

And I might add, for all of us that the Federal Reserve and its banking cartel is the most illegal, immoral, unethical, and for the people most ineffective organization in the country today.  Followed close behind, of course, by our federalized, immoral, unethical and ineffective government.

P.S.  Everyone could benefit from watching the post, on this site, from the Venue Project, titled:  "Zeitgeist Addendum,"

Whew......Stunning, amazing, enlightening, devastating, but also encouraging for future generations.  It's a 2 hour viewing, and IMHO, well worth the time.

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jrf29
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Posts: 453
Re: Minnesota Transportation Act a Horrible Idea

Hi Larry,

I'm certainly no expert in managing fiat currencies, but your ideas all seem to me like good steps in the right direction: that is, limiting the amont of money that is printed.  I would disagree with bullet point #2, for the reasons above, but otherwise anything which limits the amount of money printed and keeps prices relatively stable seems beneficial.  Indeed, it we assume that world energy production has peaked, then I wonder: is there still a reason to continuously increase the total amount of currency in circulation, except to compensate for changes in population (anybody with more expertise in that area have any thoughts?).  Overall, I do find the idea of spending money into existence more attractive than loaning it into existence.

My objection to the MTA is that it has none of this: no effective means to limit the amount of currency that is printed, except the unbounded limits of what Minnesota could spend re-painting road lines and building elevated highways to nowhere.

My second objection to the MTA is that any plan for spending money into existence must either be centrally controlled, or else Minnesota should not seek to print federal currency.   A state in which I have no legal representation should not have the right to print money, derive all the benefits of printing it, and then use the power of the federal government to force the citizens of other states (who have no control over its management) to accept it as legal tender.  This is the same idea as taxation without representation, only it is printing without representation.

If Minnesota wishes to print a fiat currency, let it print a Minnesota state note, which would be legal tender only in that state (assuming that were constitutional) - but it would be unfair to allow Minnesotans to unilaterally grant themselves the right to print fiat money, and then expect citizens of other states to merely trust that it is being managed properly.

Please bear in mind that in criticizing the MTA, I am not defending the current management of the federal reserve system.

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Thomas Hedin
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Re: Minnesota Transportation Act a Horrible Idea

I personally and publically challenge JFR29 to an open an honest debate this Sunday, September 6th, 5pm Central Standard Time with the author of the bill, Bryon Dale.

Conference call will handle up to 150 people.  Hit *6 to mute your phone line to listen in and hit *6 to unmute and join in.  Call in at 4:55pm CST.

Dedicated Call in Number : 1 (605) 715-4920

Access Code:  452413

If you have any questions please email me.

The conference call is free but you will have to pay any long distance charges, but since most of us have free long distance it shouldn't be a problem (use your cell if you have to?)

Hosted by www.freeconference.com

 

 

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jrf29
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Re: Minnesota Transportation Act a Horrible Idea

Hi Thomas,

While I certainly appreciate that Byron Dale has generously extended the opportunty to incur long-distance telephone charges for the privilege of waiting in queue for hours to speak with him on his own terms, I prefer to confine myself to the open and honest forum which I am already in. 

As an occasional participant in large conference calls, experience demonstrates that the medium is a very poor platform for true debate and would inevitably be neither open nor honest, as debates go.  Debate must involve the opportunity for repeated and clarifying exchange between the same debating parties.  But the queued telephone conference system is more suited to merely answering questions: it affords an opportuinty for the caller to ask a single short question and to receive a simple answer before being placed back into the queue, likely never to be called again. 

Hardly a true debate from the perspective of the individual participant.

Besides that, my only purpose is to chat about MTA with the group of people I happen to be with.  I do not need to speak to Byron Dale directly, although he certainly is more than welcome in the discussion.  But CM is filled with intelligent people: if the MTA offers real benefits, I'm sure we can find them without too much trouble.

After all, if the potential benefits of the MTA were such a deeply held secret that only one man (Byron Dale) was capable of illuminating them, then that wouldn't speak well for the MTA, would it?  Therefore, I see no reason why we cannot have an interesting discussion right here at CM.com, do you?  This too is an open and honest forum.

 

 

 

P.S.  My cell phone?  What cell phone?

Thomas Hedin's picture
Thomas Hedin
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Posts: 815
Re: Minnesota Transportation Act a Horrible Idea

While I certainly appreciate that Byron Dale has generously extended the opportunty to incur long-distance telephone charges for the privilege of waiting in queue for hours to speak with him on his own terms

I can personally assure you that you will be the first one to speak, can hold the floor for as long as you like, and the terms will be mutual.  Myself and some other people would really like to hear you debate him.  If you're worried about long distance charges, I'll connect you to the conference via three way calling so that you will not receive any long distance charges.

As an occasional participant in large conference calls, experience demonstrates that the medium is a very poor platform for true debate and would inevitably be neither open nor honest, as debates go.  Debate must involve the opportunity for repeated and clarifying exchange between the same debating parties.  But the queued telephone conference system is more suited to merely answering questions: it affords an opportuinty for the caller to ask a single short question and to receive a simple answer before being placed back into the queue, likely never to be called again.

You can repeat and clarify as much as you wish for as long as you wish.  There will be no queueing.  You'll be the first, and the only if you so wish.

Hardly a true debate from the perspective of the individual participant.

Again, you can hold the floor from begining to end.  If you're going to say the MTA is a bad idea I want to hear why, and what can be done to make it better, and said directly to Mr. Dale, so that if your ideas are better they get implimented.

Besides that, my only purpose is to chat about MTA with the group of people I happen to be with.  I do not need to speak to Byron Dale directly, although he certainly is more than welcome in the discussion.  But CM is filled with intelligent people: if the MTA offers real benefits, I'm sure we can find them without too much trouble.

You started a public forum and you're being asked to defend your statements.  I understand that you do not need to speak with Mr. Dale but then again you don't have to help save your country either.  Mr. Dale is 69 years old, typing is hardly his strong point.  If you want to really understand the benifits of what the MTA has to offer, then why the refusal to debate Mr. Dale via telephone?

After all, if the potential benefits of the MTA were such a deeply held secret that only one man (Byron Dale) was capable of illuminating them, then that wouldn't speak well for the MTA, would it? 

How is it anyone else's fault that you don't fully understand how our monetary system works?

Therefore, I see no reason why we cannot have an interesting discussion right here at CM.com, do you?  This too is an open and honest forum.

You've been challenged to an open and honest debate where you can hold the floor for as long as you like, will be free of any long distance charges, and will be able to debate one of the greatest monetary experts of our time.

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Thomas Hedin
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Re: Minnesota Transportation Act a Horrible Idea

Thanks for your response.  I think your concern with disciplined spending is an important and valid point that needs addressed.  

Maybe Thomas Hedin can respond to your question as it relates to the MTA, he's part of the Byron Dale team pushing the bill.  I will research the MTA more later tonight when I get back.

The question is who do you want deciding how much money will be available in your local community for it to function economically?  A Federal beaurcrat, state official, or local government?  The MTA puts the power of the purse directly into the hands of the people at the local level, and not some official that may be corroupted into shutting down the money supply over one area and favoring another.

Where would you want the most control over your economic life?  I personally favor at the lowest level possible so that directl pressure can be put on those elected represenitives (and if they refuse to listen to the people then we vote in people who will, at the local level).  I'm unsure about the rest of you but literally our infratructure is getting so bad up here in Minnesota it's killing people.  Its that serious.

How about we let the people decide their economic destiny instead of a banking system which can shut down the money supply at any time and steal all of the peoples property through foreclosers?

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Thomas Hedin
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Re: Minnesota Transportation Act a Horrible Idea

The idea of printing up whatever we need for infrastructure is of course ridiculous.  Infrastructure is not an asset in the conventional sense.  You do not foreclose on a highway or a train system.  Infrastructure is really a liability in that it has very high maintenance costs, and present a huge risk if the project does not result in an increase in productive capacity.

What is more rediculous is that Farmer Brown must believe that we can borrow ourselves out of debt and/or into prosperity.  What is even more rediculous is that Mr. Brown thinks you can have commerce without a transporatation system because he clearly states that an improved transporation system will not increase productive capacity. 

*note*  When our bridge fell in the river because that reduced the productive cabilibilty of Minnesotans, 100's of businesses went out of business.

Thomas Hedin's picture
Thomas Hedin
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Re: Minnesota Transportation Act a Horrible Idea

From what I have read of this bill I don't think it is a wise idea. I truly believe we would not be in this mess if it wasn't for the current system, which flies in the face of the Constitution.

Cleary Davos understands that our current system does not work.  I would really like to see Davos speak with Bryon Dale.

*note* Our current system does not work because it's all based on interest bearing debt.  How about we all stop our infighting and try something different?  How about we try a debt free meduim of exchange instead of an interest bearing debt medium of exchange?

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Farmer Brown
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Re: Minnesota Transportation Act a Horrible Idea

What is more rediculous is that Farmer Brown must believe that we can borrow ourselves out of debt and/or into prosperity.  What is even more rediculous is that Mr. Brown thinks you can have commerce without a transporatation system because he clearly states that an improved transporation system will not increase productive capacity. 

*note*  When our bridge fell in the river because that reduced the productive cabilibilty of Minnesotans, 100's of businesses went out of business.

 

I never once said I supported a debt-based system.  Like everyone else, all my posts are on this site for the record.  I challenge you to find where I stated a belief that "we can borrow ourselves out of debt and /or into prosperity".  You won't be able to because I never said it, and I would never believe that such a thing is possible, just like I do not believe we can spend ourselves out of debt or into prosperity, which is what this ridiculous bill would have us try to do.

You think productive capacity goes up anytime infrastructure is built?  Tell that to Japan, which has been building roads, bridges, aqueducts, and even airports for 20 years for nothing.  If you build a bridge to nowhere, is that going to increase producivity?  Productive capacity is increased by infrastructure only when productivity is already at its limit, and if the project actually does something to increase capacity.  We currently have overcapacity in this country and in much of the world. You can build all the bridges, roads and other infrastructure you want - it does not mean productivity will go up.   

Mr. Brown thinks you can have commerce without a transporatation system because he clearly states that an improved transporation system will not increase productive capacity.

Thomas, what I said was that infrastructure for the sake of infrastructure can quite often be pointless.  I also said most infrastructure is "good", meaning that most does result in increased capacity, but that if government is given a blank check to create whatever infrastructure it wants, it is quite likely to result in unproductive projects while taking away labor and other resources from the private market which would have more productive uses for it.

You misrepresentation of what I said is blatant and intentional but I guess I shouldn't be surprised.  I am glad there is now a thread dedicated to this subject so you can stop trolling and hijacking the entirety of this site with your political propaganda. 

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Davos
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Posts: 3620
Re: Minnesota Transportation Act a Horrible Idea

Hello Thomas:

Not a good day (Sunday).

Secondly I don't see any bullet points of specifically what is going to be discussed.

Lastly I'm well aware what we have is the problem - we need something better, not worse. I think the bill is a flop.

JFR29 has devoted more time to your bill than I did, I read part of the bill and skimmed the rest when I saw it was a lame horse, why don't you interview him or Farmer Brown?

Take care

DrKrbyLuv's picture
DrKrbyLuv
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Posts: 1995
Re: Minnesota Transportation Act a Horrible Idea

strabes said:

I find it funny that if a state suggests something quite small in order to fight the completely unconstitutional DC government and fraudulent Federal Reserve, then we get all upset that "it's unconstitutiional."

Great point strabes.  Clearly, the framers of the constitution were very concerned with the private Bank of England taking control of our monetary system - which is why the constitution stated that issuing and controlling a currency was a function of government.  In fact, Benjamin Franklin said that the biggest reason for the revolutionary war was to wrest the colonies free from the usury of private banking.

Having usurped British Parliament, "the Bank of England" required the American colonists to adopt a currency subject to as much as 30 percent annual interest.  As interest is the rate at which debt is multiplied, the greater the rate of interest, the faster the dispossession by artificially multiplied indebtedness.

"We would have gladly borne the little tax on tea and other matters, had it not been that they took from us our money, which created great unemployment and dissatisfaction.  Within a year, the poor houses were filled.  The hungry and homeless walked the streets everywhere."

It is a sad and shameful affair that our founding fathers fought courageously to end the tyranny of the private Bank of England and we turned around and gave our country back to them in 1913 without firing a shot. 

The Bank of England, taken over by the House of Rothschild, has been at war with us for the last 200 years. We have become a client state to the international banking cartel.  We allow them to hold a monopoly on us that requires that we borrow our own money from them at their profit.

The MTA is a valiant effort by the people to begin to take back control of their own money.  Our founding fathers would be very proud of their efforts. 

Larry

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DrKrbyLuv
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Posts: 1995
Re: Minnesota Transportation Act a Horrible Idea

The MTA and the Constitution

Attorney Ellen Brown presents a legal argument that the MTA is indeed in compliance with the constitution:

These governments could create the money they needed because they were sovereign entities, but what about individual States governed by a federal Constitution? In the United States, the U.S. Constitution controls. But that august document says very little about the creation of money – so little that banks have stepped in and taken over the business by default. Here are the sole Constitutional provisions directly addressing the creation of money:

Article I, Section 8, Clause 5: The Congress shall have Power...To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.

Article I, Section 10, Clause 1: No State shall...coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt.

Congress has been given the power to coin money, but minting coins is not the same thing as issuing paper money, checkbook money, accounting-entry money, or electronic money – the forms of money used most often today. Arguably, "to coin" money was an archaic way of saying "to create" money, but then what is to be made of the clause stating, "No state shall . . . make any Thing but gold and silver Coin a Tender in Payment of Debt"? "Coin" here clearly means precious metal coins, period.

That clause is interesting for another reason: when was the last time you heard of a State paying its debts in gold or silver coin? States routinely pay their debts with the bank-created accounting-entry money that now composes over 97 percent of the U.S. money supply (M3), and that form of money is omitted from the Constitution altogether. The States therefore violate the Constitution every day, something they must do if they are to pay their debts at all, since gold and silver coins are no longer in general circulation. The Constitution obviously needs to be amended to suit the times. Meanwhile, the Tenth Amendment to the Constitution (part of the Bill of Rights) provides:

X - Rights of the States under Constitution: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. 

Creating checkbook money is not specifically delegated to the United States, so it must be delegated to the States, unless it is specifically prohibited to them. What about the provision that "No State shall . . . emit Bills of Credit"? According to "the 'Lectric Law Library," "bills of credit are declared to mean promissory notes . . . . Bills of credit may be defined to be paper issued and intended to circulate through the community for its ordinary purposes as money redeemable at a future day."

Bills of credit are promises to pay later rather than what is being discussed here: checkbook money issued as "legal tender" – the sort of dollars banks issue every day when they make commercial loans. The Constitution does not say who is authorized to issue this sort of money – whether in paper, electronic or accounting-entry form – so under the Tenth Amendment, this right is reserved to the States and to the People. 

As the credit crisis deepens and exposes the inability of the existing banking structure to meet the public's needs, creative funding plans similar to the proposed MTA could be popping up in communities around the country. If the U.S. Congress and the privately-owned Federal Reserve will not issue the funds necessary for bridge and road repair and other urgent public projects, we can encourage our State legislators to fill the breach; and if they won't do it, we the people can get together, apply for a bank charter, and create the funding ourselves. (See E. Brown, "How to Start Your Own Bank," webofdebt.wordpress.com, February 23, 2008.)

Will anyone make an argument that the private federal reserve complies with the constitution? 

strabes's picture
strabes
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Posts: 1032
Re: Minnesota Transportation Act a Horrible Idea

Such a shame that the ONLY proactive effort being made to do anything about the financial tyranny we're under that is about to ruin all of our lives, especially our future generations, is being attacked more than anything on this site.  On another issue, several months ago some were attacking those who just want to garden and ignore the DC/Wall St issues because it's not the perfect solution to solving our problem.  But hey, it's something.  It's something BIG, so let's all do it because it disempowers the banking/corporate system, even though the constitution doesn't grant to the people the power to garden. Laughing   In my opinion, that's a good philosophy on the money issue as well. It's something. States and people better try something or game over...50 states are 50 different labs...it's absurd to claim MN issuing a little new money is going to somehow irresponsibly damage a system that has become impossibly massive and corrupt.  That's elitist thinking...the mentality of the Wall St/DC gang...serves their interests.

Regarding the financial system, this site is just a bunch of talk.  I like it...I participate...I'm just pointing out that nobody is actually DOING anything about the Fed system.  We always hear "we can't do anything about that."  Well, this bill is an example of something that can be done.  It's being done.  It would be done 1) if more people gave a [email protected]#$ about their money system, and 2) if the only people who did care, like those on this site, weren't trying to kill the effort.  It's just odd that somebody actually tries to do something, perfect or not, and it's called "horrible," a "flop," etc.

What is clear is that most people on this site agree the Fed is a malignant cancer.  And we're the patient.  That means death is on the way.  End the Fed is becoming a more accepted idea, even in the media.  I suspect it will be ended as we enter into the bottom of the depression. But I DON'T want it in the hands of the same ole elite bankers that control the same ole drunk idiots in DC.  They cannot be the ones telling us what our next system is going to be without proper input from states/people.  MTA is a good, SMALL lab experiment to see what happens...would be useful info from a state to help the feds when they end the Fed instead of pushing it up to the next banker system...BIS/IMF.

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
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Posts: 1503
Re: Minnesota Transportation Act a Horrible Idea

Strabes,

Promoting a monetary system just because it is different to the current system is about as pointless, but far more dangerous, as building infrastructure that is not needed. 

I cannot get behind this bill for reasons I have stated in many posts.  Neither I nor anyone else can get answers from the #1 promoter of this idea on this site.  Many honest and fair questions have been asked by honest and fair people, but no answers are given. 

We apparently are expected to jump on this bandwagon on faith alone.  I am as disgusted as anyone with the current system, but I am not going to allow that disgust to fuel a leap to a system that is as bad or worse, and that lays at the feet of another group of elite - this time those that run the State of Minnesota, power very similar and just as corruptible, as what we laid at the feet of the Federal Reserve. 

I can already picture the cloak-room deals between highway contractors and State politicians.  I can already imagine infrastructure projects approved only to "stimulate" a town's economy, even if the infrastructure project is not needed.  Heck, they may as well pay to make Easter Island Heads if they simply want stimulus.  No point in building a bridge or road that actually has maintenance costs if nobody is going to use them.

Sorry Strabes, but backing something just because the existing reality is horrible is not a wise path in my opinion. 

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